- The fate of the bird is now in the hands of the leaders of nations engaged in a tit for tat trade war spat.
- The price en-route to a test of the March and May 2016 support line.
NZD/USD is currently trading at 0.6756, consolidating at the lows of the US session following a solid drift lower in a continuation of the RBNZ induced sell-off. There has been a high of 0.6810 and a low of 0.6746.
The fate of the bird is now in the hands of the leaders of nations engaged in a tit for tat trade war spat and/or a Chinese policy response now that the RBNZ has given off a more dovish rhetoric – only an easing of trade tensions or a significant re-positioning in the greenback would offer any relief in this southerly trajectory, with the price en-route to a test of the March and May 2016 support line.
“The emerging market currency rout and positioning remain key to short-term direction,”
explained analysts at ANZ.
Key points from the RBNZ, (Source, Westpac, “Uncertainty reigns: RBNZ OCR Review”):
- The Reserve Bank reiterated that the OCR is expected to remain low, but gave no guidance about the timing or direction of the next move.
- Overall, this Review sounded slightly more dovish than previous RBNZ communications.
- The RBNZ’s communication style is shifting towards emphasising uncertainty.
- The RBNZ is becoming less bullish about economic growth. We were surprised that theRBNZ shifted its view on that today.
- In the bigger picture, the RBNZ’s forecasts and financial market pricing are converging on our long-held views. The economy will be mixed in 2018, and the OCR will not need to rise until November 2019.
- The RBNZ assessed the Government’s May Budget as less stimulatory for the economy than previous forecasts. We disagree with that.
NZD/USD levels
While well below the key 200-month moving average support at 0.6980, technicals stay bearish. RSIs are biased to the downside longer term, (daily RSI has fallen into oversold territory). Near-term support is located at 0.6740 while only a break above 0.6850 would alleviate the downside pressures. On a break below the said support, the next key level is located at 0.6680 as the lows 21st May 2016 weekly stick. On the flipside, albeit not favoured, above that 0.6850 level, the 50-D SMA at 0.6982 comes before 0.7060 guarding space en route to 0.7440 as the January tops on the wide.
Share
